Margate Company Hit By Injunction

November 19, 1987|By AVIDO D. KHAHAIFA, Staff Writer

A lawsuit filed by state and federal officials led on Wednesday to an injunction against a Margate firm accused of illegally selling securities.

Associated Financial Services Inc. and its president, Milton J. Gross, were ordered by U.S. District Judge Jose Gonzalez to pay a $10,000 fine to the state Anti-Fraud Trust Fund, and were permanently enjoined from fraudulently selling securities.

The action stemmed from a civil suit filed jointly in U.S. District Court in Fort Lauderdale by the state Comptroller`s Office and the federal Commodity Futures Trading Commission.

State Comptroller Gerald Lewis said Associated Financial Services had been selling precious metals contracts since Nov. 1984. The contracts were sold at least until late 1986, according to the suit.

Nearly 200 customers had paid the company a total of $1 million during that time, Lewis said.

``In reality, the defendants took the customers` money and rarely, if ever, purchased the metals as promised,`` Lewis said.

The firm neither admitted nor denied the allegations in documents filed with the federal court.

According to Lewis, the company failed to explain commission and administrative fees, gave promises of profits that had no basis, and pressured customers into investing immediately.

The securities contracts were sold as part of a ``cash purchase for subsequent delivery program,`` Lewis said.

Customers had to make a down payment of 10 to 30 percent of the value of the metals. Two-thirds of that money was charged as administrative fees and commissions.

Within a year, the customers had to either take delivery of the metals and pay off the balance of the contract, offset their contracts for a fee, or extend the duration of the contracts, Lewis said.

The company is not associated with a consumer loan firm in Margate that has a similar name.